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Understanding Venture Capital as a Type of Private Equity Investment

By JoAnn Lombardi, Pres. VR Business Brokers

Most people don’t fully understand the concept of private equity and venture capital when it comes to financing business investments.

Often, both terms are used interchangeably, but each is different. Venture capital refers to a significant investment made in a new venture of technology often by one person or an entity. By contrast, private equity refers to raising funds to purchase equity in a business through a private offering.

Only one third of all private equity funds can be considered “venture capital” funds.